Slide 1: Solid growth in cloud-based technologies in Q4 2021; separation through partial demerger
SOLID GROWTH IN CLOUD-BASED TECHNOLOGIES IN Q4 2021 SEPARATION THROUGH PARTIAL DEMERGER Investor Presentation February 17, 2022
Slide 2: Important notice
IMPORTANT NOTICE This presentation has been prepared solely for your information and it is This presentation includes “forward-looking statements” that are based Consumer Security business. The carve out financial information also strictly confidential. This presentation may not be reproduced, on pr
Slide 3: Today's presenters
TODAY’S PRESENTERS Risto Siilasmaa Juhani Hintikka Tom Jansson Timo Laaksonen Chairman of the Board President & CEO CFO EVP, Consumer Security
Slide 4: Today's agenda
TODAY’S AGENDA 1 F-Secure Group – Q4/2021 highlights 2 Planned partial demerger 3 WithSecure (Corporate) 4 F-Secure (Consumer) 4
Slide 5: Q4/2021 highlights
Q4/2021 HIGHLIGHTS Juhani Hintikka Tom Jansson President & CEO CFO
Slide 6: Key takeaways from Q4/2021
1 F-Secure Group – Q4/2021 highlights 2 3 4 KEY TAKEAWAYS FROM Q4/2021 Solid growth in cloud-based technologies • Relatively strong performance to finish the year: • The revenue of our cyber security consulting group revenue grew by 6%, driven by the 18% decreased by 6% growth in corporate security
Slide 7: Revenue growth from corporate security products accelerated to 18% in Q4
1 F-Secure Group – Q4/2021 highlights 2 3 4 REVENUE GROWTH FROM CORPORATE SECURITY PRODUCTS ACCELERATED TO 18% IN Q4 (Corporate security products,FY2021, EUR million) Revenue comparison Revenue from business security software grew Q4 • Strong sales growth in Cloud Protection for Salesforce 82.8 soft
Slide 8: Cyber security consulting impacted by attrition – mitigation in progress
1 F-Secure Group – Q4/2021 highlights 2 3 4 CYBER SECURITY CONSULTING IMPACTED BY ATTRITION – MITIGATION IN PROGRESS (Corporate security products,FY2021, EUR million) Revenue comparison Cyber security consulting revenue decreased by 6% Q4 • Negative impact from attrition in some regions however 50.0
Slide 9: Consumer security continued good performance – revenue up by 5%
1 F-Secure Group – Q4/2021 highlights 2 3 4 CONSUMER SECURITY CONTINUED GOOD PERFORMANCE – REVENUE UP BY 5% (Consumer security, FY2021, EUR million) Revenue comparison Revenue from the service provider channel grew Q4 • Whole portfolio contributing to the growth 106.3 • Strengthened position within
Slide 10: Q4 adjusted EBITDA at 7.7MEUR – 12% margin
1 F-Secure Group – Q4/2021 highlights 2 3 4 Q4 ADJUSTED EBITDA AT 7.7MEUR – 12% MARGIN (F-Secure Group, EUR million) EUR million 10-12/2021 10-12/2020 Change % 1-12/2021 1-12/2020 Change % Revenue 61.6 57.9 6% 236.3 220.2 7% Consumer security 27.1 25.9 5% 106.3 100.1 6% Corporate security products 2
Slide 11: Deferred revenue growth driven by business security software and MDR
1 F-Secure Group – Q4/2021 highlights 2 3 4 DEFERRED REVENUE GROWTH DRIVEN BY BUSINESS SECURITY SOFTWARE AND MANAGED DETECTION AND RESPONSE (F-Secure Group, Deferred Revenue1, EUR million) Non-current +6% Current •In Q4 the order intake was at all- 84.0 86.1 time high 81.0 83.2 81.5 •Orders are reco
Slide 12: F-Secure delivered 2021 according to the outlook
1 F-Secure Group – Q4/2021 highlights 2 3 4 F-SECURE DELIVERED 2021 ACCORDING TO THE OUTLOOK (F-Secure Group, FY 2021, EUR million) Revenue split & growth by business Adjusted EBITDA Cyber Security Consulting +3% Consumer Security +6% Q4 +2% Corporate Products +11% 36.5 +7% 35.7 2021 Outlook, 9th De
Slide 13: Planned partial demerger
PLANNED PARTIAL DEMERGER Risto Siilasmaa Juhani Hintikka Timo Laaksonen Chairman of the Board President & CEO EVP, Consumer Security
Slide 14: Two companies after the partial demerger
1 2 Planned Partial Demerger 3 4 TWO COMPANIES AFTER THE PARTIAL DEMERGER 34%+34% Growth 60.9 55.5 51.5 47.0 “Fast-growing Security 42.5 43.2 45.5 41.7 as a Service company“ Q1/’20 Q2/’20 Q3/’20 Q4/’20 Q1/’21 Q2/’21 Q3/’21 Q4/’21 Cloud Portfolio ARR, EURm 1) 52% 51% 42% 6% 6% Rule of 40 0% “Highly p
Slide 15: Potential for shareholder value creation through separation
1 2 Planned Partial Demerger 3 4 POTENTIAL FOR SHAREHOLDER VALUE CREATION THROUGH SEPARATION 1 Better serve customers and partners 2 Focus on growth potential with own consumer and corporate brands 3 Faster execution and increased competitiveness 4 Optimal capital allocation 5 Clear equity stories a
Slide 16: Crystallising value potential – corporate
1 2 Planned Partial Demerger 3 4 CRYSTALLISING VALUE POTENTIAL – CORPORATE EV/SALES ‘22E 21.3x 12.2x 9.7x 9.4x 8.9x 8.8x 7.9x Median: 8.4x 7.1x 6.7x Revenue EUR 130m 6.1x 5.4x (2021) 4.1x Corporate security peers Note: The financial information on this page is preliminary and unaudited. 16 Source: F
Slide 17: Crystallising value potential – consumer
1 2 Planned Partial Demerger 3 4 CRYSTALLISING VALUE POTENTIAL – CONSUMER EV/EBIT ‘22E 22.8x 21.3x 20.8x Median: 21.0x 20.5x 18.0x 15.4x Median: 15.4x 12.7x Adj. EBIT EUR 46m1,2) (2021) Consumer security peers Nordic subscription revenue peers Note: The financial information on this page is prelimin
Slide 18: Preliminary timeline for the separation
1 2 Planned Partial Demerger 3 4 PRELIMINARY TIMELINE FOR THE SEPARATION February – Q1 March 16 April 21 May Early June June 30 July 1 Further Annual General F-Secure Extraordinary Capital markets Demerger Trading in preparations Meeting Q1/22 General Meeting day in both effective F-Secure expected
Slide 19: WithSecure
WithSecure Fast-growing Security as a Service company Juhani Hintikka President & CEO
Slide 20: WithSecure at a glance
1 2 3 WithSecure (Corporate) 4 WithSecure at a glance Revenue splits ’21 36% Products Product split Consulting 30+ 130m >1,300 7,000+ 64% Year history Revenue ’21 Employees1) Partners1) 19% 61m 34% 150m 1.28 Cloud solutions Cloud solutions Q4/’21 Book- Rest of Europe ’21 Order intake2) 42% ARR ‘21 A
Slide 21: WithSecure as an investment
1 2 3 WithSecure (Corporate) 4 WithSecure as an investment 1 Operating in a Large and Fast-Growing Market 2 Strong Customer Value Proposition Generating High Retention 3 Fast-Growing Cloud Solutions Powered by World-Class Consulting 4 Growth Strategy in Place to Deliver Shareholder Value 21
Slide 22: Increasing security challenge for enterprises
1 2 3 WithSecure (Corporate) 4 Increasing security challenge for Enterprises WIDER ATTACK SURFACE COMPLEXITY COMPETENCE GAP Transformation to cloud is Lack of resources at enterprise to understand complicated from legacy solutions and implement appropriate cloud security tools SOLUTION LEADING SECUR
Slide 23: Large and fast-growing market
1 2 3 WithSecure (Corporate) 4 Large and fast-growing market CORPORATE CYBERSECURITY MARKET KEY DRIVERS EUR Successful cyber attacks create more cyber attacks 61bn 12% Exponential increase in data volume, network connectivity and number of devices 35bn Clients require more assistance in increasingly
Slide 24: Synergistic outcome-based offering
1 2 3 WithSecure (Corporate) 4 Synergistic outcome-based offering Elements™ Unified Security-aaS platform Countercept™ MDR built by attackers for defenders /Endpoint protection /Endpoint detection & response /Managed detection and Consulting response for ground and cloud /Collaboration protection So
Slide 25: Proven partner for cloud solutions
1 2 3 WithSecure (Corporate) 4 Proven partner for cloud solutions ELEMENTS CLOUDTM CLOUD CONTENT COUNTERCEPTTM PROTECTION Category Leader Growing Industry-leading capabilities #1 Solution For Partners1) With Fortune 500 in detecting advanced Customers2) attacks3) Note: 1) SiriusDecisions (2019). 2)
Slide 26: Cloud portfolio driving ARR growth
1 2 3 WithSecure (Corporate) 4 Cloud portfolio driving ARR growth ANNUAL RECURRING REVENUE1) EUR million +34% 34% Growth 60.9 55.5 51.5 47.0 45.5 42.5 43.2 34.5 32.0 31.8 41.7 28.8 29.9 28.6 28.0 30.2 Q1/’20 Q2/’20 Q3/’20 Q4/’20 Q1/’21 Q2/’21 Q3/’21 Q4/’21 Q2/’20 Q4/’20 Q2/’21 Q4/’21 Cloud Portfolio
Slide 27: Fast-growing cloud solutions powered by world-class consulting
1 2 3 WithSecure (Corporate) 4 Fast-growing cloud solutions powered by world-class consulting ELEMENTS CLOUDTM CLOUD CONTENT PROTECTION COUNTERCEPTTM Revenue growth, indexed Revenue growth, indexed Revenue growth, indexed 578 178 178 100 100 100 2019 2020 2021 2019 2020 2021 2019 2020 2021 POWERED B
Slide 28: Key competitive advantages
1 2 3 WithSecure (Corporate) 4 Key competitive advantages 1 Cloud-Native Platform for Security as a Service Award-Winning Software and Value-Adding Services for Partners 2 Category Leader in Cloud Content Protection Top Choice in Mitigating Security Risks in Cloud Apps by Salesforce 3 Market Definin
Slide 29: Improving profitability through scale
1 2 3 WithSecure (Corporate) 4 Improving profitability through scale ADJUSTED EBITDA1) Significant investments allowing a highly EUR million scalable business model: • Product offering • Operational excellence • Business process automation (9.1%) (8.3%) (13.7%) (10.9) (10.8) (16.8) 2019 2020 2021 Ad
Slide 30: Medium-term financial targets
1 2 3 WithSecure (Corporate) 4 Medium-term financial targets LATEST REPORTED GROWTH “To double revenue organically EUR 130m TARGET by the end of 2025” Revenue 2021 PROFITABILITY “Adj. EBITDA breakeven by the end of 2023 and (8%) TARGET Adj. EBITDA margin of some 20% by 2025” Adj. EBITDA margin 20211
Slide 31: F-Secure: highly profitable and growing consumer security business
1 2 3 4 F-Secure (Consumer) F-SECURE HIGHLY PROFITABLE AND GROWING CONSUMER SECURITY BUSINESS Timo Laaksonen EVP, Consumer Security
Slide 32: F-Secure at a glance
1 2 3 4 F-Secure (Consumer) F-SECURE AT A GLANCE Revenue splits ’21 21% Service Provider Partner ~170 ~16m >97% Channel split #1 Service Provider Subscribers Across Direct Service Provider Sub. in CSP Channel1,2) Partners2) Channels3) Retention Rate4) 79% 5% 106m 47m ~98% >90% 14% Rest of Europe ’21
Slide 33: F-Secure as an investment
1 2 3 4 F-Secure (Consumer) F-SECURE AS AN INVESTMENT 1 Consumer Cyber Security is a Large and Growing Market Opportunity 2 Global Leader in Communication Service Provider (“CSP”) Channel and Growing 3 Replicating CSP Proven Business Model in New Channels 4 Highly Profitable SaaS Business Model, Out
Slide 34: Our vision is to become the #1 security experience company in the world
1 2 3 4 F-Secure (Consumer) OUR VISION IS TO BECOME THE #1 SECURITY EXPERIENCE COMPANY IN THE WORLD THE DIGITAL QUICKENING EVOLVING THREAT LANDSCAPE COMPLEXITY PRIVACY HOME IDENTITY FAMILY EVERY MOMENT OF THE DAY IS WE ALL HAVE MORE TO PROTECT EASE DRIVES ENGAGEMENT DIGITAL FRICTION OBSTRUCTS GROWIN
Slide 35: Large and growing market with robust growth drivers
1 2 3 4 F-Secure (Consumer) LARGE AND GROWING MARKET WITH ROBUST GROWTH DRIVERS CONSUMER CYBERSECURITY MARKET ROBUST GROWTH DRIVERS EUR1) Security experience is broken +4% 7.0bn 5.7bn Increased awareness of cyber threats growing consumer willingness to pay Consumers are turning to Service Providers
Slide 36: Great security experiences to consumers and service providers
1 2 3 4 F-Secure (Consumer) GREAT SECURITY EXPERIENCES TO CONSUMERS AND SERVICE PROVIDERS CONSUMER SECURITY OFFERING FREEDOME SAFE ID PROTECTION TOTAL F-Secure SENSE SECURITY Billing & CRM Customer Lifetime Customer Data Driven BUSINESS integration Management Care Business Services PLATFORM DELIVERY
Slide 37: Expanding market reach
1 2 3 4 F-Secure (Consumer) EXPANDING MARKET REACH SERVICE PROVIDER PARTNER CHANNEL (~170) DIRECT CHANNEL BANKING & COMMUNICATION SERVICE PROVIDERS (~130)1) RETAIL E-COMMERCE INSURANCE Examples: Examples: GLOBAL CONSUMER MARKET New expansion areas 37 Note: 1) Fixed, mobile and converged broadband op
Slide 38: Proven model of responding to new partner needs
1 2 3 4 F-Secure (Consumer) PROVEN MODEL OF RESPONDING TO NEW PARTNER NEEDS Low Net Promoter Scores and Transactional, Low Margin Increased Competition and Customer Satisfaction Business Models Limited Differentiation Boost Retention Need for Higher Margin, Grow and Protect Rates and Gain Trust Recu
Slide 39: Key competitive advantages
1 2 3 4 F-Secure (Consumer) KEY COMPETITIVE ADVANTAGES 1 Comprehensive Suite of Security Solutions Award-winning Security Solutions to Protect Consumers’ Digital Moments 2 Global Leader in Communication Service Provider Partner (“CSP”) Channel Extensive Network ~130 CSPs Serving More than Any Other
Slide 40: Steady growth in both channels
1 2 3 4 F-Secure (Consumer) STEADY GROWTH IN BOTH CHANNELS REVENUE EUR million +6% ’19-’21 CAGR 106.3 100.1 94.8 21.3 22.1 + 5% 20.1 78.8 84.2 + 6% 74.8 2019 2020 2021 Service Provider Partner Channel Direct Channel (E-Commerce) 40 Note: The financial information on this page is preliminary and unau
Slide 41: Consistently highly profitable
1 2 3 4 F-Secure (Consumer) CONSISTENTLY HIGHLY PROFITABLE ADJUSTED EBITA1) EUR million 46.5 47.2 39.9 46.5% 44.4% 42.0% 2019 2020 2021 Adjusted EBITA Adjusted EBITA-% Note: The financial information on this page is preliminary and unaudited. Adjusted EBITDA margins during the period are less than 0
Slide 42: F-Secure consistently outperforms the Rule of 40
1 2 3 4 F-Secure (Consumer) F-SECURE CONSISTENTLY OUTPERFORMS THE RULE OF 40 COMBINATION OF ADJUSTED EBITDA1) AND SALES GROWTH EXCEEDING RULE OF 40 52% 51% 6% 6% 42% Rule of 40 0% 47% 45% 42% 2019 2020 2021 Revenue growth Adjusted EBITDA-% 42 Note: The financial information on this page is prelimina
Slide 43: Strategy for continued profitable growth
1 2 3 4 F-Secure (Consumer) STRATEGY FOR CONTINUED PROFITABLE GROWTH INCREASE DEVELOP NEW EXPAND INTO ARPU PRODUCTS NEW CHANNELS F-Secure SAFE Insurance SENSE Banking TOTAL F-Secure FREEDOME F-Secure ID PROTECTION ID PROTECTION Retail All-in-one integrated security experience 43
Slide 44: Medium-term financial targets for consumer
1 2 3 4 F-Secure (Consumer) MEDIUM-TERM FINANCIAL TARGETS FOR CONSUMER LATEST REPORTED GROWTH “High single digit organic revenue growth” EUR 106m (+6% Y-o-Y) TARGET Revenue 2021 PROFITABILITY “After initial growth investments, 44% TARGET adjusted EBITA margin of above 42 percent” Adj. EBITA margin 2
Slide 45: Q&A
Q&A
Slide 46: Thank you!
saad od F-Secure. THANK YOU!
Slide 47: Appendix
APPENDIX
Slide 48: Financial information
FINANCIAL INFORMATION EUR million 2021 2020 2019 2021 2020 2019 Revenue 130.0 120.1 122.5 106.3 100.1 94.8 Adjusted EBITDA (10.8) (10.9) (16.8) 47.4 46.7 40.1 Adjusted EBITDA margin, % (8.3%) (9.1%) (13.7%) 44.6% 46.6% 42.3% Adjusted EBITA (17.2) (18.0) (23.2) 47.2 46.5 39.9 Adjusted EBITA margin, %
Slide 49: Spin-off through a partial demerger
SPIN-OFF THROUGH A PARTIAL DEMERGER Overview of structure Illustration of the partial demerger • In the partial demerger, all assets and liabilities belonging to the B2C division would be transferred to a separate company 100% F-Secure’s shareholders New shares in F- incorporated during the demerger
Slide 50: F-Secure TOTAL – all-in-one security app
1 2 3 4 F-Secure (Consumer) F-SECURE TOTAL – ALL-IN-ONE SECURITY APP SECURITY, PRIVACY AND “SMART TASKS” GUIDE AND “FAMILY RULES” IDENTITY PROTECTION ASSIST CONSUMERS PROTECTS THE ENTIRE FAMILY 50
Slide 51: F-Secure SENSE – connected home security
1 2 3 4 F-Secure (Consumer) F-SECURE SENSE – CONNECTED HOME SECURITY F-SECURE SENSE AS F-SECURE SENSE INTEGRATED TURNKEY SOLUTION WITH PARTNER APP1) 51 Note: 1) Example: Smart WiFi application from AirTies combined with SENSE
Slide 52: Security business platform optimized for service providers
1 2 3 4 F-Secure (Consumer) SECURITY BUSINESS PLATFORM OPTIMIZED FOR SERVICE PROVIDERS Cost-efficient to deliver Automated Standardised Self-service and operate delivery model partner integration capabilities 52